DtE 32, February 1997
ALL LOGGED OUT!
Further evidence of the crisis in Indonesia's forestry industry is
emerging as Ministry of Forestry, Djamaludin Suryohadikusomo, confirmed in
October that 60 of the 90 private forest concessions to end in 1996 would
not be renewed due to poor management. The 60 concessions will be handed
over to the state owned forestry companies Inhutani I-V.
Given the appalling state of the forests left in the care of
concessionaires, it is not surprising that the Inhutanis are taking over
these concessions with reluctance. The private logging companies have
stripped the most profitable virgin forests and ignored their reforestation
obligations, despite forestry regulations requiring them to implement
Indonesia's selective cutting and replanting policy (TPTI).
In Central Kalimantan, for example, PT Inhutani III is to develop 2.2
million hectares of timber estates in areas formerly (mis)managed by
nineteen concessionaires. The companies, which will form joint ventures with
Inhutani, include two of the best known logging concerns in Indonesia,
Jayanti and Barito. The others include Tanjung Raya, Dwima, Antang Group and
Bumi Indah Raya.
Of Inhutani III's new concessions, 7.6% are virgin forests; 75% are
logged-over and 17.4% are grassland and scrub. Only 5.7% of the area handed
over to Inhutani V was virgin forest. "If forests were managed in a
sustainable manner, at least 43% should have been virgin forest", said its
President.
According to Inhutani III's production director, the company will spend
US$5.9 million to replant the forests this year, which will be taken from
the reforestation funds, or from profits. "If the reforestation fund is
difficult to tap, we'll use 20% of our profit," he said. Clearly, the
reforestation fund, which consists of fees collected from timber
concessionaires, is not easy to get hold of, despite its huge size -- it
reached Rp 880.7 billion last year up from Rp 806.6 billion in 1995. Perhaps
this is because large amounts of the fund is being used for purposes other
than reforestation - like the destruction of hundreds of thousands of
hectares of swamp forest, also in Central Kalimantan, for the
million-hectare rice fields project (see DtE 29/30 and 30).
Forestry analysts have questioned whether the state-owned companies will
be able to manage the forests any better, especially as two of them have
less than six years experience.
The Forestry Minister stated that 20 million hectares of Indonesia's
forests were in a critical state and warned that the proportion could
increase rapidly. However, he put most of the blame on shifting cultivators.
At a conference on sustainable tropical forestry management, Forestry
Department expert, Dr IGM Tantra, warned that Indonesia's natural forests
could be completely logged out by 2030 unless the TPTI system was properly
practised.
Source: Kompas 23/10/96; Jakarta Post 11/10/96 Jakarta Post 7/12/96, 13 /1/ 97
Indonesia gets $42 million forestry grant from EU
Indonesia has received a 33 million ECU (US$ 42.3 million) grant from the
European Union to start a programme in South and Central Kalimantan and to
establish a Forest Liaison Bureau.
The grant was presented to Forestry Minister Djamaludin in December by EU
Ambassador in Jakarta Klaus-Peter Schmallenbach, Swedish Ambassador Mikael
Lindstrom and Finnish Ambassador Hannu Himanen.
The programme is supposed to help the government develop sustainable
forest management and optimal utilisation of forest products. It is also
supposed to involve local communities in South and Central Kalimantan, as
well as local governments and the private sector. Unfortunately, this
community involvement seems to mean imposing changes on their agricultural
practices. According to Schmallenbach, it is important to guide local
communities in carrying out more productive planting techniques which take
up less land and "less temptation for logging". "It is also important to
educate the local communities to regard to forests as the most important
asset not only for themselves but for their children and their children's
children." This last statement would perhaps be more appropriately targeted
at the government-approved timber concessionaires, for the devastation they
cause in the forests and their total disregard for the welfare of future
generations.
The current EU-Indonesia forest programme consists of five major
projects, including a fire prevention and control project and the
controversial Leuser National Park Development Programme. (Jakarta Post
14/12/96)
DtE 32, February 1997
IFC funds Trans-PIR project
The International Finance Corporation, private sector arm of the World
Bank, has agreed to provide US $41 million in equity and loans to an
Indonesian company to develop oil palm estates and refineries in West
Kalimantan.
The IFC has also helped the company, PT Kalimantan Sanggar Pusaka,
raise a $10 million loan from the German Development Bank.
Kalimantan Sanggar is a subsidiary of the forest-based Satya Djaya
Raya Group, popularly known as Lyman Group.
The company will use part of the loan to develop 34,000 hectares of oil
palm plantations under the nucleus estate/smallholder scheme which uses
transmigrant families, as well as local farmers. Corporate secretary Indradi
Kusuma said the project will help raise the living standards of more than
17,000 rural families. He quoted IFC's director for agribusiness development
Karl Voltaire as saying " we are pleased to be associated with a project
that has a high development impact." (Jakarta Post 22/11/96)
Unfortunately, the project probably will have a high development
impact, the negative kind, that leads to explosions of social tension like
the recent events in Sambas.
DtE 29/30 August 1996
THE TALES OF TWO BAD CONCESSIONAIRES
Dayak Besar -- out of logs and cash
The Dayak Besar Group controls forest concessions of around 200,000 hectares
and a number of timber mills in East Kalimantan. Poor management prompted
the government to ban two of its subsidiaries, PT Dayak Besar Vincent Timber
Co. and PT Gelora Dayak Besar, from transporting logs and sawn timber from
their forest concessions in East Kalimantan to their wood-based industries.
Dayak Besar's concessions ended in 1992, but the forestry ministry
issued a temporary extension on condition that the Group establish a
joint-venture with the state-owned forestry firm. The agreement was
cancelled, however, when Dayak Besar closed down its office.
The group was declared bankrupt in 1995 with debts amounting to Rp350
billion (US$152 million) of which the majority was owed to state-owned Bank
Rakyat Indonesia. It also owes a large amount of money, including unpaid
reforestation fees to the government.
Business tycoon Probosutedjo (a half-brother of President Suharto)
agreed to take over the debt-ridden companies of the Dayak Besar group last
year, but in March announced his decision to back out of the deal. His
comments give a hint of the havoc caused by the logging company:
"...it turns out I have to pay those huge debts with nothing left of the
forests to manage. Where would I get the money?"
(Jakarta post 4/3/96)
Djajanti Group -- soft punishment
In February this year the government announced that it had decided to
revoke the licences of three Djajanti Group concessionaires after finding
proof that its downstream subsidiary PT Nusantara Plywood was involved in
using illegal timber. Nusantara Plywood, based in Gresik, East Java, has
also been fined Rp 1.3 billion (US$567,685). The concessions are in Central
Kalimantan and cover around 300,000 hectares.
Djajanti, owned by Burhan Uray, is one of Indonesia's biggest timber
groups. It currently holds 25 concessions which cover 2.8 million hectares
of forests in Kalimantan, Maluku and West Papua (Irian Jaya). The West Papua
concessions provide logs for a massive plywood mill in Maluku.
Revoking concessions, however, is not as bad for the company as it
sounds, however. The company will continue operating the concessions under a
two-year cooperation agreement with state-owned PT Inhutani III. This is to
prevent mass lay-offs of workers and to ensure log supplies to the Nusantara
mill. Under the arrangement, PT Inhutani III will take over management of
the concessions while logging and other field activities will be carried out
by the Djajanti workforce. After the two-year period, the two companies may
decide to set up a joint venture. Logs produced under the joint cooperation
will supply the Nusantara Plywood plant.
Two other concessions (but not those in West Papua) due to expire this
year will not be renewed, according to Djamaludin. (Jakarta Post 14/2/96,
Republika 14/2/96)
[This was part of a larger report on the state of the forests in
Indonesia. Copies of this available on request.]
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Down to Earth
International Campaign for Ecological Justice in Indonesia
Carolyn Marr (dte@gn.apc.org)